AGENCY

An agency relationship involves three persons

• The owner of the goods(principal)
• Representative of the owner(agent)
• The buyer of the goods(third party)
Definition of agency
• American restatement on the law of agency second edition 1958-agency is
the fiduciary relation which results from the manifestation of assent by one person to
another that the other shall act on his behalf and subject to his control and consent
by the other so to act.
• FMB Reynolds; Bowstead and Reynolds on agency- agency is the fiduciary
relationship which exists between two persons one of who expressly or implied lay
consent that the other should act on his behalf so as to affect his relations to third
parties and the other on who similarly consents so to act or acts.
• GHL Friedman- agency is the relationship which exists between two persons when
one called an agent is considered in law to represent the other called a principal in
such a way such as to be able to affect the principal’s legal position in respect of
strangers to the relationship by the making of contracts or the disposition of property.
• Robert Bradgate; ‘Commercial law’- a person who is recognized by law as having
a legal rights, liabilities and relationships of another called a principal.
Key notes
• The agent must affect the legal relationship between the principal in the principal’s
dealings with the third party
• The agent must negotiate the terms of the contract but may or may not conclude the
contract
• The principal is bound by the acts of the agent
• In domestic or family setting there is no intention to create legal obligations
• It is possible to have two agents and two principals
• The agency relationship is a question of law
 • Agency relationship can be inferred from the contractual agreement or the conduct of
the parties involved
• The power of an agent to bind his principal is limited to the power of the principal to
bind himself
• If the powers of the principal to alter his own legal relations are ended by his death,
insanity or bankruptcy, the agents powers are terminated automatically
• Person who are sui juris may nevertheless have the power to act as agent for the
person who are
• An agent creates rights and liabilities for his principal
• There is no privity of contract between the agent and the third party but between the
principal and the third party
Power is a legal concept which connotes the ability of a person to alter legal
relations by doing some act. Authority is a matter of fact that connotes that one
person has given instructions or permission to another to act on his behalf.
Agency can be implied from a person’s conduct-BUAMA V OPPONG, Commented [sq1]: The plf boarded a vehicle in Accra as a
fare paying passenger travelling to Ho. The vehicle was
owned and driven by the def. the plf was carrying a travelling
ADA CO-OPERATIVE FOOD FARMERS V ABODEI bag. He was ordered by one of the station overseers
popularly called ‘bookman’ to come down with the bag. He
The plf is an agricultural company. It bought all the tractors with a loan from ADB. The was asked to pay 40 cedis which he paid. The bookman
insisted his bag be collected and put in the boot of the bus
officers of the plf union saw the defs in possession of the tractors and equipment but failed notwithstanding the plf’s protest that it contained some
to retrieve it. The defs asserted a claim of right on the basis that they bought the tractors breakables and very important documents and desire to take
the bag on the bus. On arrival at the destination at Ho, the
and equipment from one Azakpoe, officer of the department of co-operatives which had plf’s bags was nowhere to be traced. The def refused to pay
as he denied he was negligent or that he was vicariously
guaranteed the loan from ADB. The issue was whether ADB or the union was a party to the liable for the action of the bookman as he was not his agent.
sale. Held- ADB and the union as joint owners can effectively pass title in the tractors and Held- if a person represented or permitted it to be
represented that another person had authority to act on his
equipment as they would be the proper person to sell. However, they may authorize any behalf, he would be bound in the same way as if he had in
fact authority to act. Since the bookman charged for luggage
other person as their agent to sell on their behalf. There is no credible evidence in support in the presence of the def and gave the fee charged to him, it
of the alleged agency. was clear the def had given him ostensible or apparent
authority to the bookman to act on his behalf. Accordingly
there was an agent and principal relationship between the
BAAH V SALEH BROTHERS bookman and the def.

The plfs were importers of manufactured electrical goods. They ordered goods for the defs,
usually on the def’s instructions. The plfs by their specially endorsed writ claimed for the
value of goods sold to or bought for the defs. The defs averred that they were wrongly and
unlawfully debited and have rather overpaid the plfs. Held- it is clear that the plfs were
utilizing their import licenses in ordering goods when there specifically instructed to do so
by the defs and charged the defs commission. The defs were aware that in carrying out the
defs instructions the plfs had to open letters of credit on the defs behalf and to pay bank
charges connected thereon. There was therefore an implied agency between the parties.
Categories of agency relationship
• Special agent- he has authority limited to the performance of a specific act- E SFEIR
& CO V NATIONAL INSURANCE COMPANY OF NEW ZEALAND
The plfs are insured with the def company. They claimed loss suffered on cargo they
insured with the def company under a marine insurance policy. The def company sued
per Glyndova as their agents. The plf claimed Glyndova are local agents by whom
Commented [sq2]: The plf appointed the def as his agent
claims made on the def company are payable. Glyndova denied they were agents of with full powers to operate his banking account which he
entrusted to him and with the running of his motor spare
the def company and therefore cannot sue or be sued on behalf of the insurance parts business and then left the country. He intended to
company. Held- as between the agent and his principal the authority may be limited return shortly but unfortunately his visa to return to Ghana
was revoked. The def sold the business and used the
by an agreement or special instruction yet as regards third persons, the authority proceeds to carry on one partnership business and another
until eventually he converted the last of such partnership
which the agent has is that which he is reasonably believed to have, having regard to business into a limited liability company. The plf claimed a
all the circumstances and which is reasonably to be gathered from the nature of his declaration that the def is a trustee holding a share of
certain business interest and properties in trust for the plf
employment and duties in relation to the third person. On proper construction of the and an order for payment of monies which may be found
due to him. The def asserted that although he was an agent
terms of agency, Glyndova’s agency is a special or limited agency as it was limited to of the plf, the business he carried on for the plf completely
paying claims accepted by their principals. It does not extend to authority to defend collapsed and his agency thereby determined and that after
that any business or commercial venture he engaged had
suits on behalf of their principal. been undertaken by him in his individual capacity. Held- the
def is a general agent or universal agent. The type of agency
• General agent-he has authority to perform duties which are normally within the where the principal reposes trusts and confidence in the
scope of his business entrusted in him-EBOE V EBOE person whom he selects as his agent

• Universal agent-he has unlimited authority to perform any act which the principal Commented [sq3]: The plfs through their broker were
negotiating to purchase a ship, the ocean frost from the defs
would have performed including the execution of a deed on the principal’s behalf. This (principal). The plfs planned to let the ship back to the defs
on a three year charter party which would finance the sale.
type of agent is appointed by a deed or power of attorney. The broker was promised a substantial interest if the deal
went through smoothly. The defs vice president and
Agency relationship compared to others chartering manager (agent) was the representative of the
def and he was negotiating with the broker. He informed the
broker that the defs were unwilling to accept a three year
• Agency and vicarious liability charter party but only a one year. The broker then offered
o In vicarious liability the wrong of the servant for which the master is liable it the vice president a bribe and he signed a three year charter
party to the satisfaction of the plfs. He however also signed a
one committed by the servant in the course of his employment. In agency, the one year charter party leading his principal (defs) to believe
that they were bound only by a one year charter party. The
wrong of the agent for which the principal is liable is one committed in the ship was let to the plfs who after one year returned the ship
course of his authority. Thus, vicarious liability gives rise to liability only, because the defs failed to renew the contract. The plfs sued
for damages for wrong repudiation. Held-an agent who was
whereas an agency may create rights and liabilities to the principal. known to have no general authority to enter unto
o An agent may also be an employee but often is an independent contractor. transactions of a certain type but who nevertheless falsely
represented to an innocent third party that he obtained such
Vicarious liability is only imposed where the employee was acting in the course authority could not reasonably believed to have that
authority where the principal did not give such authority.
of his employment. For an agent when the agent was acting within the scope of Also, an employee will not be vicariously liable for a
the actual, apparent or deemed authority. ARMAGAS LTD V MUNDOGAS SA, THE fraudulent misrepresentation made by his employee to an
innocent third party if he did not by words or conduct induce
OCEAN FROST the third party to believe that the agent was acting in the
lawful course of the employer’s business. The defs were not
liable as the agent had no authority to agree on a third year
charter party.
 • Agency and sale. The relationship between agency and sale is mutually exclusive as
in a particular transaction, a person cannot be acting as agent if he is a buyer or seller
to his principal and vice versa. Sale is a commercially adverse relationship; agency
involves a fiduciary relationship of trust and confidence. A car dealer may call himself
an agent of a particular manufacturer but in actual fact he purchases vehicles and
resells them to his own customers. He is strictly liable for any defects in the goods as
the seller of the goods. Things that need to be considered in other to determine
whether one is an agent or sole distributor:
o Whether the agent intends to act on his own behalf or on the manufacturer’s
behalf
o Whether the agent is accountable to the principal for monies received by him
o Whether the resale price is set by the agent or the principal
Agents of the manufacturer
o Do not make profits for themselves from the sale but receive commission for
every sale they make
o They render accounts to the manufacturer for profits
o They are not strictly liable for any defects found existing in the goods they sell
Where third party rights in the goods are an issue the courts are likely to favour the
interpretation of the situation that best protects the third party. In an agency
relationship, where the agent becomes insolvent any monies owed and paid to the
agent belongs to the principal and cannot be touched by the liquidators. However
where it is a sale the principal is seen as a creditor of the seller and will need to wait
his turn to be paid back his monies owed to him.
• Distributorship. When a manufacturer supplies goods to a franchisee, that person may
be described as a selling agent. He promotes the manufacturer’s goods and agrees not
to sell rival products. This relationship is one of sale not agency. The dealer buys from
the manufacturer and resells to his own clients, fixes the price himself and seeks to make
profits. There is no privity of contract between the ultimate buyer and the manufacturer
and so the manufacturer bears no contractual liability. The manufacturer only looks to
the distributor for payment unlike the agency where the agent only arranges the contract
and the principal collects from the third party. A principal would have more control over
an agent than a manufacturer over a dealer.
• Advertising agent. They do not act as agents when they place advertisements on
behalf of their clients. ** They are liable for the price of the advert and will seek
reimbursement from its clients along with payment of its fees.
• Franchising. An entrepreneur with the product or service may instead of selling directly
to the public authorize other business to supply the service. In return for paying a
franchise fee, they are often allowed to use the trade name, logo, and may benefit from
the good name of the franchisor. However each franchise is a separate business
regardless of similar appearances. The franchisor usually agrees to provide goods for the
franchisee to sell and the franchisee deals with the public as a seller.
• Subsidiaries. A company may create a network of subsidiary companies to market their
services or products. Each subsidiary has a separate legal entity from its holding
company. The subsidiary may act as an agent or principal for the holding company, but
their relationship is more of a buyer and a seller. All these are spelt out in elaborate
agreement between the various subsidiaries.
• Agency and trusts. They both affect the legal position of those persons with whose
affairs they are dealing and are accountable to their principals for profits derived from
their position. The agent however acts for the principal while the trustee hold property
for another. A trustee holds money or property for another, to which he has the legal
title but which belongs in equity to the beneficiary. As such a trustee does not have
agency functions at all. His duty is to carry out the terms of the trust. An agent on the
other hand may often hold no money or property for his principal at all; if he does receive
money from or for his principal he may merely be in a position of debtor to his principal
in respect of it; and if he receives goods he may hold them as a bailee only. The principal
can there enforce his rights against the agent on a personal basis but for the beneficiary
he can only enforce his right when a fiduciary duty is breached. For a trust relationship
to arise in an agent-principal relationship, the parties must have intended it to be so.
• Agency and bailment. Bailment is the delivery or transfer of goods or chattel by the
bailor to the bailee with an option to buy or be delivered up to the bailor. The bailee does
not represent the bailor and cannot enter into contracts on behalf of the bailor. He may
however have the power to do things which are reasonably incidental to his use of the
goods which he holds.
Agents by operation of law
Commented [sq4]: Section 137 of act 179
• Companies’ directors and other officers. The authority to act on behalf of the Commented [sq5]: Morkor was the Chief Executive
Officer (CEO) and also the main shareholder of the East
company is vested primarily in the board of directors as a whole. MORKOR V KUMA. Coast Fisheries Company Limited. The company was
The regulations can give the board of directors certain powers that a director by indebted to Kuma for fish supplied to the company. Morkor
had not given a personal guarantee. The company could not
himself does not have. The board can also appoint a managing director as CEO who honor its contractual obligations and defaulted in payment
and so the creditor sued both the company and Morkor.
can act on behalf of the board. This person has a dual capacity of being an agent of Morkor protested that she was not the right person to be
the company by his position as a director and also an agent of the board through his sued but the case went along and she was maintained as one
of the defendants. Held- Since a company is non-human the
position as managing director. Sometimes this relationship is apparent as the person only means by which it may execute an agreement is for its
directors, or some other authorized person, to sign on its
is represented as having such authority to third parties. The third party should not be behalf
aware of the lack of authority of the agent. If the third party knew then he cannot rely
on the agency relationship. A person who holds himself out as a director even though
he is not will be deemed to be.

FREEMAN & LOCKYER V BUCKHURST PARK PROPERTIES

The plfs, a firm carrying on business as architects and surveyors claimed an amount
due from the defs as fees in relation to Buckhurst park estate, the property of the def
company. The plfs had received instruction from the second def, a director of the def
company. The second def to the knowledge of the board had acted as if he were a
managing director of the company although he was never appointed as such. Without
express authority of the board, he had employed the plf to undertake certain work on
the Buckhurst park estate. The issue was whether the liability to pay the amount due
was that of the def company or the second def who was not served with proceedings
because his whereabouts were unknown. Held- the second def’s act in engaging the
plaintiffs was within the ordinary ambit of the authority of a managing director and
the plaintiffs did not have to inquire whether he was properly appointed; it was
sufficient for them that under the articles of association there was in fact power to
appoint him as such and accordingly the defendant company were liable for the
plaintiffs' fees.
BOUSIAKO V COCOA MARKETING BOARD,

The def board entered into contracts with the plf for the construction of various roads.
The contracts contained a clause permitting the plfs to claim for fluctuation increment
payments due to the ever-rising cost of construction due to inflation. The plfs
demanded for an increment due to fluctuation and one Dr Erbynn, a member of the
interim management committee and chairman of the central tender board of the CMB
replied approving fluctuation payments to the plfs which were to be forthcoming. In
reliance of those letters the plfs negotiated overdraft facilities with their bankers. The
official of the def board purported to deny liability to pay claiming Dr Erbynn acted
ultra vires. Held- Erbynn as the chairman of the CTB and also a member of the IMC,
had the fullest authority to announce the awards. Thus on the principle that Erbynn
was one of the officers representing the other two directing minds of the CMB, his act
would fully be the act of the CMB. Therefore the question of absence of authority in
Erbynn to write the letter of award did not arise. Even if it did, the onus was on the
defendants to prove that the plaintiffs had actual knowledge that Erbynn had no
authority to write, or that having regard to their position with, or relationship to the
company, they ought to have known of such absence of authority
 COMMODORE V FRUIT SUPPLY. The powers of management may also be delegated Commented [sq6]: The name of an individual who have
never been appointed as director appeared on the
to other officers such as the company’s secretary. letterhead as the director of the company. Moreover he was
allowed to transact all kinds of business on behalf of the
• Partnership. By operation of the incorporated private partnership act (act 152), company. Held- not only was he a director within the
every partner is an agent of the firm. Every partner who does an act or carries on the meaning of section 179 his acts were binding on the
company.
usual business of the firm binds the firm and the other partners. However an outsider
cannot hold one member of a partnership liable on a contract made by another partner Commented [sq7]: Section 14 of act 152

if he knew the other party had no authority to make such contracts or did not believe
he was a partner. A person who is not a partner holds himself as a partner or allows
another to believe him as one and on that basis enters into a transaction with him is
liable as a partner or agent of the firm. UNITED BANK OF KUWAIT V HAMMOUD Commented [sq8]: Hammoud, a client of the firm
requested a loan from the plf bank. He stated that the def
• Employees- the employer is only vicariously liable for the torts of his employees. An firm had control of the money and gave the name of the
second def as reference. The second def is a partner of the
independent contractor maybe the agent of the employer, having authority to bind def firm. The second def gave the undertaking on behalf of
the employer in accordance with the employment contract between them. An the firm without the knowledge of the other partners and
when signing it, it was not backed by funds or any form of
employee is often an agent of the employer. He has authority to make statements security. Hammoud disappeared with the money and the
bank brought an action against the def firm to recover the
about the goods which will be binding on the employer. This power is derived from amount of the loan. The issue was which of two innocent
his status as an agent and not that of an employee. parties, the plaintiff or the third and fourth defendants
should bear the loss caused by Mr. Hammoud and Mr.
• Hire purchase and credit transactions- where goods are bought on hire purchase, Emmanuel. Held- Where a solicitor who had actual authority
to represent himself as being a practising solicitor with an
the dealer is deemed to be the agent of the finance company and not of the hirer. established firm gave an undertaking which the receiver of
the undertaking was entitled to assume was given in the
FINANCINGS V STIMSON context of an underlying transaction which was part of the
usual business of a solicitor, the undertaking would be
The defendant saw a motor car at the premises of a dealer and signed a hire-purchase enforced against the firm as having been given with
ostensible authority and therefore binding on the firm. On
form provided by the plaintiff finance company and produced by the dealer. The form the facts as represented to the bank, a reasonably careful
and competent bank would have concluded that the
contained, amongst others, clauses that the agreement should be binding on the finance undertaking was given in the context of an underlying
company only on acceptance by their signature. The defendant paid the first instalment transaction which was part of the usual business of a
solicitor. Therefore, the lender had discharged the burden of
due and was allowed to take possession of the motor car, after driving it for some time, proving that Emmanuel had had ostensible authority to bind
the firm of solicitors which employed him.
he became dissatisfied with it and as such, he returned it to the dealer, saying that he
Commented [sq9]: Section 12 of NRCD
did not want it and offering to forfeit the instalment which he had paid. Neither the
defendant nor the dealer informed the finance company of the return of the car. The
car was later stolen from the dealer's premises and when it was recovered, it was
severely damaged. The finance company signed the agreement and later it sold the
damaged car at an auction. The company sued the defendant and claimed damages for
breach of the hire-purchase agreement or as bailee on the terms of the agreement. Over
here the issue was whether the there was a valid acceptance of the revocation by the
dealer and this is determined if they were working under authority from the plaintiff.
Held- per Lord Denning MR, for the purposes of this case, the dealer was an agent of
the finance company as he did most of the transaction on behalf of the company. He
further held that the dealer was authorized to receive communications on behalf of the
 finance company and as he was authorized to deliver the car to the defendant in the
first place, so he was ostensibly authorized to receive it back when it was returned. Just
as he was authorized to receive the offer for the plaintiffs, so, also, he was ostensibly
authorized to receive the revocation: and to receive the communication that the
defendant had no further use for it.
• Professionals- professionals acting on behalf of clients may be the agents of those
clients for limited purposes. For example a lawyer conducting litigation on behalf of the
client is the client’s agent and may have authority in the settlement of the case which
will be binding on the client. WAUGH V H B CLIFFORD Commented [sq10]: The def, a firm of builders employed
some solicitors to negotiate with the plf, a dissatisfied house
purchaser. The solicitors arranged a compromise with the plf
Types of agency relationships whereby the def will purchase the property. The def
however wrote to the solicitors instructing them not to
• Factors and brokers- factors are agents whose business is to dispose of goods on agree to the compromise, but by error, the solicitors were
not informed and the compromise was agrees. The def
behalf of the principal and who are given possession of the goods for that purpose. A refused to accept and the plf brought an action for specific
broker on the other hand contracts for the purchase and sale of goods but does not have performance. The def argued that the solicitor has no
authority to agree to the compromise. Held- although there
possession of goods. The distinction between them is very important as the law gives was no actual authority, the solicitor had apparent authority
to agree to compromise. As such he was deemed to be an
factors extensive powers to dispose of the principal’s properties in order to protect third agent of the def
parties who deal with them
• Del credere agents- He is an agent who in consideration of extra remuneration called
a del creder commission guarantees to his principal that third parties with whom he
enters into contracts on behalf of the principal will duly pay sums becoming due under
those contracts. They negotiate contracts on behalf of the principal and guarantees to
the principal that the third party will pay any sum due under the contract. This is often
Commented [sq11]: The plf company acted as
used when the third part is not known to the principal. He also charges the principal extra commission agents for
the defendants. They utilize their own import licenses to
commission for providing the guarantee. order goods for them and charge them commission. The defs
• Commission agency- this agent deals with the principal on the agreement that in would sometimes bring addresses of manufacturers
overseas for the plf company to order goods for them.
dealing with the third party, the agent would deal in his own name. This type of agency
involves indirect representation. The result is that the agent is liable to the third party for Commented [Ma12]: The plf's sent a consignment of
tobacco to the def's through the intermediary of Demestre
the price if he buys the goods or for the quantity if he sells the goods. As against the chia & co. The def's did not know that the agent was working
principal, the agent is not answerable for the quality of the goods but is only required to for the plf's but were aware that they he was working for a
third party since there were references in correspondences
take reasonable care in the performance of his duties. The title refers to a function or to an ‘interesado’. The goods were insured by the def's at
the request of Demestre. The ship carrying the consignment
task with which this type of agent is entrusted and not his remuneration. The third party of tobacco was lost and the insurance money was paid to the
contracts with this agent without notice of an agency relationship. This type of agency is def's. The plf intervened to claim the money because
although they had been given to Demstre, they had been
more common in civil law countries. Common law developed the doctrine of undisclosed given on behalf of the plf's. Demestre was bankrupt and so
the plf's preferred that the def's transfer the insurance
agency to enable the principal to sue and be sued on a contract made on his behalf, even monies. The def's argued they were obliged to transfer the
when the agent had been instructed not to reveal the agency. BAAH V SALEH BROTHERS insurance money's to Demestre on the ground of a
contractual relationship between them. Held- there was a
MASPONS Y HERMANO V MILDRED, privity of contract between the def's and the plf's. The plf's
had a right of action against the def's for the balance of the
policy money's.
• Confirming houses- they are mainly used in international trade. They normally act on
behalf of an overseas client who wants to import goods and serve as experts and provide
local expertise. The agent may act in different ways depending on the instructions of the
principal. A confirming house may buy goods in the domestic market and resell them
abroad-two contracts. He may also simply act as an agent negotiating a purchase on
behalf of its client and revealing its capacity as an agent- one contract. In some instances
the domestic suppliers may be unwell to deal with a foreign buyer because the credit
worthiness of the buyer may not be known. The confirming house may make a contract
of sale on behalf of the foreign buyer but enter into a separate contract with the supplier
to guarantee that the buyer will perform his obligations under the contract of sale. The
domestic seller thus has the security of being able to claim the price from the confirming
house which is both within the jurisdiction or domestic courts and known to be
creditworthy. SACKEY V FATTAL Commented [sq13]: The def was the sole agent of a
Japanese firm producing fabric. The plf agreed to buy some
of the fabric through the def. the parties agreed on the
quality of the goods to be same as the samples produced.
Upon delivery of the goods however, the plf found most of
Authority of the agent them were inferior to the sample sent to and approved by
the def’s principals. The plf sold the goods in at a lower price
The relationship (external) between the principal and the third party depends on the scope and sued for a refund. The def argued that he was not the
right person to be sued as he was an agent and as such,
the agent’s powers. The relationship (internal) between the principal and the agent depends there was no privity of contract between them and as a
result she can only sue the principal. Held- there was an
on consent. existence of an agency relationship (confirming house). The
principle that the agent be liable of the contract between the
principal and the third party is decided on case by case basis
and it is not a concept that in an agency relationship, the plf
is without rights and liabilities. From the case, the court
concluded that the plf had the reference that in case of any
CONSENT dispute, the def will be liable.

PRINCIPAL AGENT THIRD

PARTY

SCOPE OF AGENT’S POWERS

The principal is bound to the third party by acts which he authorizes or appears to have
authorized through the agent. The agent is entitled to remuneration from the principal
for the performance of his authority granted to him. The agent may also incur personal
liability if he claims authority he does not have.

The law recognizes the agent as having the power to bind the principal in four ways.
• Where the principal gives power to the agents actions, he has actual
authority
• Where the agent acts without the principals authority but the principal
gives retroactive authority-ratification of the contract
• Where the agent acts without the principal’s consent but the law deems the
principal to have consent. As in agency of necessity
• Where the agent acts without the principals consent but the principal is
estopped from denying the agent’s authority, the agent is said to have
apparent authority
The difference between actual and apparent authority is that an actual authority is a legal
relationship between the principal and the agent created by a consensus to which they
alone are parties. To this agreement, the third party is a stranger and he may be totally
ignorant of the existence of any authority on the part of the agent. The agent however
still create rights and liabilities for the principal when the agent contracts with the third
party.
An apparent authority is a legal relationship between the principal and the third party
created by a representation made by the principal to the third party to the fact that the
agent has authority. To this relationship, the agent is a stranger. Commented [sq14]: FREEMAN & LOCKYER V BUCKHURST
PARK PROPERTIES (MANGAL) LTD; DIPLOCK J

Types of authority
• Actual authority-this is where the principal gives his prior consent to the actions
of the agent. The agent’s authority is derived from the agreement between the
principal and the agent. The agreement between the agent and the principal has
to be consensual but it need not be contractual or reduced into writing. The
relationship can only be established by the consent of the principal and the agent,
they will be taken to have consented if they have agreed to what amounts in law
as such relationship, even if they do not recognize it themselves and even if they
have professed to disclaim it. In a commercial context, it can be reduced into a Commented [sq15]: GARNAC GRAIN CO INC V HMF; LORD
PEARSON
formal contract between the principal and the agent. In this case the agent is entitle
to be paid for his service. The agent can also perform for free. There is no need
 for formalities in the appointment of an agent. Actual authority may be express or
implied.
o Express actual authority- this can be made orally or in writing or by a
deed. In Ghana, it can be made through the execution of the power of
attorney. The power of attorney must be in writing, must be signed,
witnessed and state the duration and scope of the power of attorney. An Commented [sq16]: Section 1 of the powers of attorney
act, 1998. Act 549
adult principal can appoint a minor to act on his behalf because the actions
of the agent are deemed to be that of the principal and will be fully binding
on him. However the contract between the principal and the agent minor may
not be binding on the agent. SHEPHARD V CARTWRIGHT, G V G Commented [sq17]: The deceased obtained authority
form his children to allow the bank to accept his signature
o Implied actual authority- here the principal is deemed to have given withdrawals of money from accounts in their names. One of
his children was a minor. Held- for An infant cannot appoint
implied consent to the action of the agent. HELY-HUTCHINSON V BAYHEAD. an agent to act for him, neither by means of a power of
Authority is implied where it is inferred from conduct of parties and attorney, nor by any other means. If he purports to appoint
an agent not only is the appointment void, anything the
circumstances of the case. Implied actual authority, also called "usual agent does is also void and incapable of ratification.
authority", is authority an agent has by virtue of being reasonably necessary Commented [Ma18]: The complainant, a single woman
aged 32, had intercourse with a boy aged 17 and gave birth
to carry out his express authority. As such, it can be inferred by virtue of a to a child. She wrote telling the boy of the birth but he did
position held by an agent. An agent who is expressly appointed may have his not reply. She then wrote to his parents and within 12
months of the birth received letters from them enclosing
authority defined or expanded by implication. He may be deemed to have sums of money and promising to make regular payments to
maintain the child. The mother's letter stated that the
additional authorities that are reasonably incidental to and necessary for him money was from her son. The promises to make regular
to carry out his authorized act. payments were not carried out.
Commented [sq19]: Richards, a director and chairman of
a def company was accustomed to entering into various
contract on the company’s behalf. And only informing the
other directors subsequently. He entered a contract with the
MANU V KUMA plf which resulted in a loss to the plf. The plf sued the
company under the contract. The company alleged that
The plaintiff’s husband died and the defendant was appointed his customary successor. Richard had no authority to enter into the contract. Held-
The deceased’s widow, maintained and educated her children from the proceeds of three Ostensible or apparent authority is the authority that an
agent has as it appears to others. It often coincide with
of the deceased’s farms to which she laid claim. The plaintiff subsequently lost the farms actual authority. Richard had no express actual authority to
enter into the contracts and also he had no implied authority
to the defendant who refused to make any contribution towards the maintenance of her flowing from the nature of his office. However, there was an
children. This was so despite an arbitration award, confirmed by the West African Court implied authority as a result of the circumstances that the
board by their conduct acquiesced in his acting as a director.
of Appeal whereby the defendant became responsible to look after his predecessor’s The plf as being a member of the board had knowledge and
personal interest and because he did not make full
children. The plaintiff assumed full responsibility for the education of her children and disclosure, the contracts were not void but voidable at the
later when her task was completed and the children had left school she instituted instance of Bayhead. However it was too late for the def to
set it aside and as such the plf can enforce it.
proceedings against the defendant for £G2, 500 being the amount she had spent on the
four children during the period. She relied upon the arbitration award and the
defendant’s general responsibility as a successor at customary law. The defendant
admitted the arbitration but contended that it did not create an enforceable obligation
upon him. Held- A mother is, in the absence of the father or the father’s successor, the
natural guardian of her infant child and she is entitled to sue on their behalf for their
maintenance or any other relief. Where the claim is for expenses incurred by the mother
in discharging a legal obligation to the children which the successor had neglected to
discharge, the mother is an agent of necessity of the successor and is entitled to be
reimbursed at common law.

ADA CO-OPERATIVE FOOD FARMERS V ABODEI

The plf is an agricultural company. It bought all the tractors with a loan from ADB. The
officers of the plf union saw the defs in possession of the tractors and equipment but
failed to retrieve it. The defs asserted a claim of right they had brought the tractors on
the basis that they bought the tractors and equipment from one Azakpoe, officer of the
department of co-operatives which had guaranteed the loan from ADB. The issue was
whether ADB or the union was a party to the sale. Held- ADB and the union as joint
owners can effectively pass title in the tractors and equipment as they would be the
proper person to sell. However, they may authorize any other person as their agent to
sell on their behalf. There is no credible evidence in support of the alleged agency.

SPRINGER V GREAT WESTERN RAILWAY COMPANY Commented [sq20]: The plf through his agents agreed
with the defs for the carriage by them of baskets of
tomatoes to be delivered to the plfs. The ship carrying the
tomatoes was detained by bad weather. A strike of
railwaymen on the defs’ system broke out unexpectedly and
ROSENBAUM V BELSON so further despatch of the goods by rail could not be made
for an indefinite time. The defs’ traffic agent was anxious to
Instructions were given by the owner of a real estate agent to sell property for him. The see the condition of the cargo and so aft sorting them out
agent entered into a contract with the plf who agreed to buy the house. The def refused ordered that it would be best if sold. The railway strike
effectively ended in the afternoon. The plf brought an action
to sell the house to the plf and argued that the agent had no authority to conclude and for damages for breach of contract. Held- in the
circumstances, the defs’ traffic agent ought to have
sign the contract. Held- in the absence of anything narrowing the meaning of the word communicated with the plf so as to get instructions as to
‘sell’ not only to negotiate for but to sign an agreement for sale, the def is bound by the what he wished to be done with the tomatoes. The defs’
were therefore liable in damages for having sold the
contract as the agent had authority to sign an agreement for sale as that would give to tomatoes.
the word ‘sell’ its full meaning.
Commented [Ma21]: The plf through his agents agreed
with the defs for the carriage by them of baskets of
tomatoes to be delivered to the plfs. The ship carrying the
HAMER V SHARP tomatoes was detained by bad weather. A strike of
The def gave an estate agent instructions to procure a purchaser for it and advertise it railwaymen on the defs’ system broke out unexpectedly
and so further despatch of the goods by rail could not be
at a certain price. He entered into a contract with the plf and signed the memorandum made for an indefinite time. The defs’ traffic agent was
anxious to see the condition of the cargo and so after
as the agent of the def. The def argued that he did not appoint the estate agent to sell sorting them out ordered that it would be best if sold. The
the property for him nor authorized him to enter into any contract on his behalf and had railway strike effectively ended in the afternoon. The plf
brought an action for damages for breach of contract. Held-
instructed him to discontinue the advertisement of his property at the time he signed the in the circumstances, the defs’ traffic agent ought to have
contract. Held- when instructions are given to an agent to find a purchaser or landed communicated with the plf so as to get instructions as to
what he wished to be done with the tomatoes. The defs’
property he, not being instructed ass to the condition to be inserted in the contract as were therefore liable in damages for having sold the
tomatoes.
title, is not authorized to sign a contract on the part of the vendor. The estate agent
therefore had no authority to enter into a contract for sale with the plf.
 PANORAMA DEVELOPMENTS V FEDELIS FURNISHING FABRICS Commented [sq22]: The plfs ran a car hire business. The
def appointed Bayne as their secretary. Bayne hired cars
from the plf after he made a representation to them that he
had the authority of the company to hire the cars for
UNITED BANK OF KUWAIT V HAMMOUD business purposes. He signed the company’s paper ordering
Hammoud, a client of the firm requested a loan from the plf bank. He stated that the def the cars as ‘company secretary’. He failed to pay the cost of
the hiring. The plfs sued to recover the money due to them.
firm had control of the money and gave the name of the second def as reference. The Held- a modern secretary has ostensible authority to enter
into contracts connected with the administrative side of his
second def is a partner of the def firm. The second def gave the undertaking on behalf company’s affairs and as such Bayne had authority to enter
of the firm without the knowledge of the other partners and when signing it that it was into a contract with the plf.

not backed by funds or any form of security. Hammoud disappeared with the money and
the bank brought an action against the def firm to recover the amount of the loan. The
issue was which of two innocent parties, the plaintiff or the third and fourth defendants
should bear the loss caused by Mr. Hammoud and Mr. Emmanuel. Held- Where a solicitor
who had actual authority to represent himself as being a practicing solicitor with an
established firm gave an undertaking which the receiver of the undertaking was entitled
to assume was given in the context of an underlying transaction which was part of the
usual business of a solicitor, the undertaking would be enforced against the firm as having
been given with ostensible authority and therefore binding on the firm. On the facts as
represented to the banks, a reasonably careful and competent bank would have
concluded that the undertaking was given in the context of an underlying transaction
which was part of the usual business of a solicitor. Therefore, the lender had discharged
the burden of proving that Emmanuel had had ostensible authority to bind the firm of
solicitors which employed him.

BAAH V SALEH BROTHERS

The plfs were importers of manufactured electrical goods. They ordered goods for the
defs, usually on the def’s instructions. The plfs by their specially endorsed writ claim from
the value of goods sold to or bought for the defs. The defs averred that they were wrongly
and unlawfully debited and have rather overpaid the plfs. Held- it is clear that the plfs
were utilizing their import licenses in ordering goods when there specifically instructed to
do so by the defs and charged the defs commission. The defs were aware that in carrying
out the defs instructions the plfs had to open letters of credit on the defs behalf and to
pay bank charges connected thereon. There was therefore an implied agency between
the parties.

APPARENT AUTHORITY
 • Apparent authority- the principal may be bound by the acts done by the agent Commented [sq23]: The first def was the beneficial
owner of the house which he was anxious to sell. He asked
without his consent or even in breach of the principal’s express prohibition if his his wife to put it into the hands of estate agents. The asking
price was £25,000. The plf made an offer for the house and
words or actions give the impression that he authorised the acts done by the agent. the wife instructed the estate agents to accept it. The first
Apparent authority is the authority which a person appears to have to act on def did not give his authority to the second def to enter into
a binding contract. The old instructed an architect to
another’s authority. SPIRO V LINTERN. undertake certain functions on his behalf in connection with
the house. The plf's also visited the house and was
introduced to the first def the new owner. The first def went
• Apparent authority may exceed or expand an actual authority or even exist abroad but before he appointed. A power of attorney
empowering her to complete the sale of the house. However
independently of apparent authority. The distinction between implied actual the house was never handed over to the plf, it was sold to
the third def. Held- the first def was under the duty to
authority and apparent authority is that in the former the agent is entitled to inform the old that the second def acted without his
commission and in the latter he is not. authority and that his failure to do so amounted to a
representation by conduct that she had authority. To found
an estoppel it is not necessary that the representation relied
The agent is deemed to have apparent authority in these cases on should be false to the knowledge of the represent or
provided that the representor acted in such a way that's
v The principal appoint the agent to act as a managing director. The principal imposes reasonable man would take the representation to be true
and believe that he was intended to act on it. In the
a limitation on the agent as to the amount involved when entering into contracts. He circumstances the plf had been induced but the efforts def’s
exceeds the limitation. The third party entered into the contract without knowledge representation to a to his detriment in that he had been put
to expense in employing the architect and the builder as
that the agent had express limitations. The agent has apparent authority and therefore well as continuing the employment of his solicitor in the
conveyancing work in connection with the purchase. The
the principal would be bound first def's was therefore stopped from asserting that the
v The principal terminates the authority of the agent. The agent continues to act as an contracted entered into without his authority and the plf
was entitled to specific performance. ... [1]
agent and enters into a contract with a third party who has no knowledge of his Commented [Ma24]: The def had a jeweller’s shop and
termination. The agent has apparent authority and therefore the principal is bound. gave the agent authority to give orders for goods to be sent
to the shop. The agent had given such orders to the plf in the
SUMMERS V SOLOMON DREW V NUNN pastor which the def had accepted the goods. The agent
absconded from the shop and ordered from the plf and took
v The principal never appoints the agent as such. However the principal look on as the the goods away saying he was taking it to the shop. The
agent holds himself out as the principal’s agent. If the third party is lead to believe defer fused to pay for the goods and the plf's brought an
action to recover what is due. Held- he def had conducted
that the agent is an agent and on that basis enters into a contract with the agent, the himself in a way to make the plf believe that whiles the
agent was under employment he had the authority of the
principal is bound by the contract. FREEMAN & LOCKYER V BUCKHURST PARK def to order goods from the plf. The plf not having notice of
PROPERTIES (MANGAL) LTD. the agent’s termination of authority would therefore be
entitled to recover the price form the def.

The defendant (P) employed his nephew (A) to run his

Held- jewellery shop. In practice the nephew would order
To entitle a contractor to enforce against a company a contract entered into on behalf jewellery from, inter alia, the plaintiff jewellery supplier (T)
and the defendant would pay for it. The nephew left the job,
of the company by an agent who had no authority to do so four conditions must be but the supplier was not told that the nephew’s agency had
been terminated. Later, the nephew obtained some
fulfilled- ... [2]
Commented [sq25]: The plf was a tradesman and the def
• representation that an agent had authority to enter on behalf of the company into gave his wife authority to deal with the omegas his agent
a contact of the kind sought to be enforce must have been made to the contractor and could pledge his credit. The def became insane during
that time the wife ordered goods from the plf's. At the time
• The representation must have been made by a person who had actual authority to of supplying the goods, the plf was not aware of the def’s
insanity. The defer covered his reason and refused to pay for
manage the business of the company either generally or in respect of those matters the goods ordered. Held – the authority give to the wife was
to which the contract related. terminated when the def became insane. The old would be
able to recover because there's made representation when
• The contractor must have been induced by the representation to enter into the he was sane that the wife was his agent. The plf was not
aware that he was insane until after he had supplied the
contract goods.
 The company must not have been deprived, under it memorandum of articles of
association, of the capacity either to enter into a contract of the kind sought to be
enforced or to delegate authority to the agent to enter into a contact of that kind.

The basis of apparent authority

The basis of apparent authority is estoppel. Three important ingredients must exist to give
rise to estoppel.
• There must be a representation that the agent has authority. The representation could
be by words or conduct and must be one of fact not law. An estoppel by silence can
only arise where there is a duty on the party against whom the estoppel is asserted
to speak.
• The representation must be made by the principal or someone acting on his behalf
• The third party must believe the representation and change his position on the basis
of that representation. It must be relied by the third party who is alleging apparent
authority. OVERBROOKE ESTATES LTD V GLENCOMBE PROPERTIES LTD Commented [sq26]: The plf instructed a firm of
auctioneers to sell property belonging to the plf at an
auction. The auction was subject to the condition that
• The third party does not know of the agent's lack of authority vendors do not make or give and neither the Auctioneers nor
any person in the employment of the Auctioneers has any
Estoppel after the act authority to make or give any representation or warranty in
relation to these premises. The auctioneers, represented to
This is where by the principal’s conduct after the agent has exercised authority he did not Glencombe that the local council had no plans for the
property and were not interested in compulsory purchase.
have, the principal is said to be bound by the actions of the agent. SPIRO V LINTERN After Glencombe made a successful bid, the council told
Glencombe the property would be purchased in
The first def was the beneficial owner of the house which he was anxious to sell. He asked its slum clearance program So Glencombe refused to pay
Overbrooke. Overbrooke sought specific performance. Held-
his wife to put it into the hands of estate agents. The asking price was £25,000. The plf the auctioneer did not have the seller’s authority to make
made an offer for the house and the wife instructed the estate agents to accept it. The first representations about the property being sold in a term he
used at an auction sale and as the auction was subject to the
def did not give his authority to the second def to enter into a binding contract. The old condition that the auctioneers have no authority to make
any representation about the premises, the def could not be
instructed an architect to undertake certain functions on his behalf in connection with the said to have relied on the statement made by the
house. The plf's also visited the house and was introduced to the first def the new owner. auctioneer.

The first def went abroad but before he appointed. A power of attorney empowering her to
complete the sale of the house. However the house was never handed over to the plf, it
was sold to the third def. Held- the first def was under the duty to inform the old that the
second def acted without his authority and that his failure to do so amounted to a
representation by conduct that she had authority. To found an estoppel it is not necessary
that the representation relied on should be false to the knowledge of the represent or
provided that the representor acted in such a way that's reasonable man would take the
representation to be true and believe that he was intended to act on it. In the circumstances
the plf had been induced but the efforts def’s representation to a to his detriment in that he
had been put to expense in employing the architect and the builder as well as continuing
the employment of his solicitor in the conveyancing work I connection with the purchase.
The first def's was therefore stopped from asserting that the contracted entered into without
his authority and the plf was entitled to specific performance.

The decision in WATTEAUV V FENWICK Commented [sq27]: The defendant purchased a beer
house from Humble. Humble remained as manager with his
name above the door as licensee. Humble’s authority was
This appears to be apparent authority as the contact made by the agent was within the restricted to the purchase of beer. However, the plaintiff
scope of his usual authority of an agent in his position and the third party was unaware of regularly supplied cigars and bovril to Humble on credit, in
the belief that Humble was the owner of the beer house. The
the limitation. However, the essential requirement that the third party should believe that suppliers knew nothing of the real principal. The plaintiff
remained unpaid and after discovering the truth sued the
the agent had the authority of the principal was missing as the third party believed the agent real principal for the money owed. This was a case of
was the principal. Some writers have argued that the case is evidence of a separate legal undisclosed principal where the agent has acted outside of
his actual authority. There was no actual authority – the
category of ‘usual authority’. What is clear is that the third party cannot rely on the decision principal had expressly limited Humble’s authority to the
purchase of beer. There was no apparent authority either
in WATTEAU V FENWICK if he knows of the limit placed on the agent’s authority or if he because there had been no representation that Humble was
should know of it or if the facts show that the agent contracted for his own benefit. In that an agent; only that he was the owner. Held-the defendant
principal was liable. Wills J held (Lord Coleridge CJ
case, the agent would be personally liable to the exclusion of the principal. concurring) that once it is established that the defendant
was the real principal, the ordinary doctrine as to principal
Agency of necessity and agent applies – that the principal is liable for all the acts
of the agent which are within the authority usually confided
to an agent of that character, notwithstanding limitations, as
A person who acts in an emergency to preserve the property or interest of another maybe between principal and agent, put upon that authority
treated as an agent of necessity. Agency of necessity can arise where there is no existing
agency relationship between the principal and the agent. In this situation, the actions of the
agent would be deemed to be authorized even though no actual authority was given. Like
cases of apparent authority, agency of necessity can arise in spite of the fact that there is
lack of authority from the principal. However, unlike cases of apparent authority, agency of
necessity can give the agent rights against the principal so that the agent can sue the
principal for the payment of commission. Where there is an existing agency relationship
between the principal and the agent, an agency of necessity may also be explained on the
basis of implied authority.
The agency of necessity may operate in these situations
• The agent creates privity of contract between the principal and the agent. For instance
by arranging for the third party to store goods belonging to the principal. Here the
effect of the authority is to create an agency where there is none. It may also operate
to expand the authority of an existing agent.
• The agent can rely on the necessity as a defence to the claim by the principal of
wrongful interference or as a basis for a claim to reimburse expenses incurred.
The agent and the principal need not known each other. What brings them together is the
emergency of the situation. For an action by an agent to give rise to him being an agent of
necessity,
• The emergency must be a commercial one
• There is no means of communicating to the principal of the emergency, impractical of
obtain instruction from the principal
• The agent must have acted reasonably in all circumstances
• The agent must act in good faith and in the principal's interest and not his own interest
For an agent of necessity to arise there must be an actual and definite commercial necessity
for the agent's actions. The classes of people who may claim to be agents of necessity are
kept deliberately narrow and restricted by the courts. SPRINGER V GWR. Commented [sq28]: The plf through his agents agreed
with the defs for the carriage by them of baskets of
tomatoes to be delivered to the plfs. The ship carrying the
Agency relationship arising out of cohabitation tomatoes was detained by bad weather. A strike of
railwaymen on the defs’ system broke out unexpectedly and
It is usually said the wife has the authority to pledge the husband's credit for necessaries. so further despatch of the goods by rail could not be made
for an indefinite time. The defs’ traffic agent was anxious to
Cohabitation of marriage does not necessarily give rise to authority but the rebuttable see the condition of the cargo and so aft sorting them out
presumption. This applies to cohabiting couples too. The presumption can be rebutted by ordered that it would be best if sold. The railway strike
effectively ended in the afternoon. The plf brought an action
the husband showing that the wife had adequate supply of necessaries or that his wife had for damages for breach of contract. Held- in the
circumstances, the defs’ traffic agent ought to have
adequate allowance or that he expressly told his wife not to pledge his credit. PHILLIPSON communicated with the plf so as to get instructions as to
V HAYTER what he wished to be done with the tomatoes. The defs’
were therefore liable in damages for having sold the
tomatoes.
Ratification
There are situations where the agent would not have actual or apparent authority but the Commented [sq29]: A wife purchased a gold pen and
principal would be bound by his actions. This happens where the actions of the agent have pencil case, a seal skin cigar case, a seal skin tobacco pouch,
a guitar and a Russia purse (leather prepared with birch bark
been ratified by the principal. In the absence of actual or apparent authority, the principal oil) .Held- the presumption of authority arising from
cohabitation is confined to necessaries suitable for the style
can adopt the actions of the agent which are done in his name without his authority through in which the husband chooses to live. This was not the case
ratification. If the principal choose to ratify the unauthorised act of the agent then the agent here and there was no presumed authority.

would be deemed to have had the authority of the principal at all material times. If a contract
was entered into with a third party, then the ratification would operate to establish a privity
of contract between the principal and the third party and the principal would be bound to
the third party and the agent can claim against the principal his rights as an agent.
This is important because:
• The agent would be able to claim that he has a right to be reimbursed
 • It entitles the principal to enforce the contract because the third party cannot claim
that the agent did not have the authority of the principal because the ratification take
retrospective effect.

Requirement for ratification

• The act should have been done in the name of the principal. The agent must have Commented [sq30]: The appellant authorized Roberts, a
claimed directly or through his actions that he had authority. The agent should not corn merchant to buy wheat on a joint account for himself
and them at a certain price. He failed to purchase the wheat
have acted in his own name. KEIGHLEY MAXSTED V DURANT at that price and entered into a contract with the respondent
to buy the wheat at a higher price and in his singular name.
• The principal must have been in existence at the time of the agent's action on his The appellant however later ratified the contract after
becoming satisfied with it. The appellant and Roberts
behalf. however failed to take delivery of the wheat and the
respondent had to sell it at a loss. He brought an action
• The principal can ratify the contract if he was competent to make it at the time of the against the appellant. Held- a contract made by a person
intending to contract on behalf of a third party but without
agent's actions and at the time of ratification. Therefore a minor cannot ratify a his authority cannot be ratified by the third party so as to
render him able to sue or be sued on the contract where the
contract after attaining majority. person who made the contract did not profess at the time of
it to be acting on behalf of a person.
• The principal can ratify voidable acts but not void acts. For example, where the agent
claims authority he does not have any resulting contract would be voidable for Commented [sq31]: The def’s name was forged by one
Richard on a promissory note made in favour of the plf. The
misrepresentation. BROOK V HOOK. GREENWOOD V MARTINS BANK def signed a memorandum in order to prevent the
prosecution of Richard but at the same time denying that the
signature to the note was his of written by his authority. The
issue was whether the memorandum could be construed to
amount to a ratification. Held- an act which is in itself illegal
The effect of ratification is not capable of ratification.

Ratification of the agent's unauthorised act by the principal operates as if at the time of the Commented [sq32]: A husband and wife had a joint
agent's action he had the authority of the principal. BOLTON & PARTNERS V LAMBERT, account with bankers who undertook to honour cheques
signed by both customers. Afterwards that account was
closed and an account was opened in the sole name of the
The plf owned a factory, which the def offered to buy. This offer was accepted by the husband, the wife having no authority to draw cheques upon
managing director, though in fact he had no authority to do this. There was a disagreement, it. During the currency of both accounts the wife repeatedly
forged her husband's signature to cheques, and drew out
and the def withdrew his offer. The plf started proceedings for breach of contract. The Board money which she applied to her own uses. During the
of Directors of Bolton Partners later ratified the actions of the managing director. The def currency of the sole account the husband became aware of
the forgeries, but being persuaded by his wife to say nothing
argued that this ratification came too late. Held- the ratification by the company related about them, he kept silence for eight months. When he
finally determined to disclose to the bank the forgeries, the
back to the date of the contract, and the repudiation by the def was of no avail, wife committed suicide. the husband brought an action
notwithstanding that the company itself was not bound by the contract until the ratification against the bankers to recover the sums paid out of the sole
account on cheques to which his signature had been forged
thereof took place. Held- the plaintiff owed a duty to the defendants to disclose
the forgeries when he became aware of them and so enable
It also has a retroactive effect on the third party. the defendants to take steps towards recovering the money
wrongfully paid on the forged cheques; that through his
failure to fulfil this duty they were prevented from bringing
PRESENTACIONES MUSICALES SA V SECUNDA an action against the plaintiff and his wife for the tort
committed by the wife until after her death, when any action
A writ was issued on the instructions of a director of the plf company. The writ claimed relief against the husband for the wife's tort abated; and therefore
that the plaintiff was estopped from asserting that the
against the first def for alleged infringements of copyright in certain sound recordings. It signatures to the cheques were forgeries, and was not
entitled to recover.
was found that the plf company had been dissolved under Panamanian company law and
although it issued the writ within the three year limit, the three directors appointed as
liquidators purported to ratify the instructions to the English solicitors to initiate proceedings
after the three year limit had expired. Held- where a solicitor commenced proceedings in
the name of a plf without authority, the plf could ratify the act of the solicitor and adopt the
proceedings and thereby cure the original defect in the proceedings, but only if the act of
ratification was done at a time and in circumstances when the ratifying party could himself
have lawfully done the act which was ratified. If a time was fixed for doing a particular act
the doctrine of ratification did not apply if it had the effect of extending that time. The writ
issued without authority was not a nullity and accordingly the plf notwithstanding the
expiration of the limitation period was entitled to adopt the action.

Commented [sq33]: Section 30—Disposition by

Method of ratification Mercantile Agent in Possession of Goods,
Etc.
• The principal may expressly ratify the actions of the agent (1) Where a mercantile agent is, with the consent of the
owner, in possession of goods or of the documents of title to
• The principal may impliedly ratify the actions of the agent through his conduct. goods, any sale, pledge or other
disposition for value of the goods or documents of title made
by him apparently in the ordinary course of his business as a
• The principal's inaction can also be interpreted to mean ratification. Here the inactivity mercantile agent, shall be as valid as if he were expressly
creates a rebuttable presumption. authorised by the owner of the goods to make the same, if
the person taking under the disposition acts in good faith,
and has not at the time of the disposition notice that the
mercantile agent has not authority to make the same.

The principal would not be taken to have ratified the action of the agent unless the principal (2) Where a mercantile agent has, with the consent of the
owner, been in possession of goods or of the documents of
had a real choice to ratify and had a full knowledge of all the circumstances. title to goods, any sale, pledge or
other disposition for value, which would have been valid if
the consent had continued, shall be valid notwithstanding
the determination of the consent
Disclosed and undisclosed agency unless the person taking under the disposition has at the
time thereof notice that the consent has been determined.

In spite of the general rule, the liabilities of the principal and the agent may differ depending (3) Where a mercantile agent has obtained possession of any
on whether the agency is disclosed or undisclosed. A disclosed agency is where the fact of documents of title to goods by reason of his being or having
been, with the consent of the owner, in possession of the
the agency is known to the third party. In a disclosed agency involving the payment of goods represented thereby, or of any other documents of
title to the goods, his possession of the first mentioned
money, whether the principal has discharged this obligation to the third party or the third documents shall, for the purposes of this section, be deemed
party has discharged his obligations to the principal would depend on the authority of the to be with the consent of the owner.

agent. In the absence of actual or apparent authority the third party may still acquire (4) For the purposes of this section the consent of the owner
shall be presumed unless the contrary is proved.
property rights as a result of provisions to protect third parties. Section 30 of the sale of
goods act. Merely giving possession of the goods does not make the principal liable but the (5) The goods or documents of title thereto are not deemed
to be in the possession of a mercantile agent within the
principal must create in the mind of the mercantile agent that he owns the goods. meaning of this section unless they are in his possession in
his capacity as mercantile agent.

(6) Nothing in this section affects the liability of a mercantile

agent to the owner for any wrongful sale, pledge or other
Exceptions where the agent would be liable disposition of the goods or documents of title
 • An agent would become a party to a contract it is appears on the proper construction
of the contract it appears the parties intended for the agent to become a party.
• If the agent signs in his own name, the agent would be liable. SIKA CONTRACT V BL
GILL AND CLOSE GATES COMPANY LTD. Commented [sq34]:

• An agent would be liable where he personally executes a deed. Here, an agent would
be excused if the deed was executed in pursuance to a power of attorney.
• If he personally signs a bill of exchange unless it is clear he signs in a representative
capacity. APPIAH V NGUANOH
The plaintiff sued to recover £450 on a promissory note signed by the twelve
defendants, whom the plaintiff claimed to be jointly and severally liable. The
promissory note was in the following terms:" We, the undersigned Elders, Stool
holders, Supis and Councilors of the Edina State, do hereby faithfully promise to pay
to Mr. T. E. W. Appiah, at the expiration of one year's time from today's date the sum
of (£450) Four hundred and fifty pounds being amount borrowed to meet the legal
expenses incurred in connection with the Buranta dispute. To this were subscribed the
signatures of the defendants, who signed not in their personal names but by their
traditional styles or titles as office¬holders in the state. Held- In view of the following
the promise, " We, the Elders, Stool holders, Supis and Councilors of the Edina State
do hereby faithfully promise ... "; the styles of the various signatures; and, applying
the Bills of Exchange Ordinance, s. 26, the signatories must be regarded as agents,
acting for and on behalf of the Edina State as principal and without incurring personal
liability.
Breach of warranty of authority
When the agent deals with the third party, he does so on the basis that he had warrant of
authority from the principle. If this warrant is breached (the agent had no authority), the
agent would be liable to the third party. This is a strict liability. Unlike the tort of deceit or
negligence, the third party would only have to prove that the agent had no authority.

Where the agent claims authority he does not have the third party can sue the agent for
the breach of warranty of authority. All that the third authority has to prove is that the agent
did not have the principal's authority. COLLEN V WRIGHT
The plf was desirous in obtaining a lease for a farm. He enlisted the help of the deceased
who was previously the agent of the def. At the time of the transaction, the deceased was
no longer the agent. The plf signed an agreement and took possession of the farm to which
he started making expenses on. The def refused to sign arguing that the deceased did not
have the authority to let the farm on the terms set forth in the agreement. The plf brought
an action for specific performance. Held- A person who professes to contract as agent for
another impliedly undertakes with the person who enters into the contract on the faith of
the agent's being duly authorized that the authority which he professes to have does in fact
exist. Should the principal repudiate the contract the agent is liable to the person whom he
has induced to enter into the contract for any damage which that person sustains through
the assertion of authority being untrue.
The fact that the agent honestly believed that he had the authority does not affect the
question of his liability. YONGE V TOYNBEE. Commented [sq35]: Solicitors were instructed by a client
to conduct his defence to an action which was being
commenced against him. Before the commencement of the
Section 35 of the Auction Sales Law PNDCL , action, the client was certified to be of unsound mind. In
ignorance of this fact, the solicitors entered an appearance
ARHIN V KISSIWAA for him. Subsequently, the plf's solicitor became aware of
the def's unsound mind an application was made to have the
action struck out and that the solicitors who have assumed
to act for the def should be ordered personally to pay the
plf's cost of the action up to date. Held- the solicitors have
The rule is mitigated by some factors taken upon themselves to act for the def in the action and
thereby impliedly warranted that they had authority do so
• If the agent is unsure about his position he may warn the third party that he is not and therefore they were liable to pay the plf's cost of the
action.
sure he had the authority. HALBOT V LENS
Commented [sq36]:
• If the principal authorizes the agent's unauthorized actions, the agent's lack of
authority is retroactively cured by the ratification. Commented [sq37]: A meeting was convened between
the plf and the def where it was agreed that the def's firm
• If the agent had no notice of the bankruptcy of the principal and the agent acted in was to pay to them an amount of money. The def signed on
behalf of himself, his wife and Dr Clarke. Dr Clarke refused to
good faith. Bankruptcy and insanity operates to terminate the agency contract. adopt the agreement and repudiated the authority of the
def. The plf brought an action against the defs for a
• If the agent is the donee of the power of attorney, he is not liable to the third party if declaration that the defs were bound to procure the release
by Dr Clarke of all claims by him against the plf the def
unknown to him the power of attorney is revoked. alleged that at the time of signing the agreement the plf was
informed that the def had no authority to sign as agent for
SAID V BUTT either his wife or Dr Clarke. Held- a person who purports to
contract as agent on behalf of an alleged principal is liable on
an implied warranty of his authority only if the contracting
The plaintiff was a Russian gentleman of independent means. The defendant was the party relied on the existence of authority in fact. He is not so
chairman and managing director of the Palace Theatre, Ltd. a light opera was produced at liable if at the time of purporting contract, he expressly
disclaimed any present authority
the Palace Theatre by the company under an agreement with the plaintiff. During the run
of the opera differences arose between the plaintiff and the defendant, and the plaintiff
made serious charges against the defendant and other officials of the theatre with regard
to the sale of tickets for the performances of the opera. These charges were in fact without
foundation, though the plaintiff believed them to be true, and they were deeply resented by
the defendant and other officials of the theatre. The opera was withdrawn a new day was
fixed as the date of the first performance of a new play at the Palace Theatre. The plaintiff
desired to be present at the performance. He twice applied to the company in his own name
for a ticket, but his application was refused. The plaintiff, therefore, knowing that any
application in his own name would be rejected asked a friend of his, a Mr. Pollock, to buy a
ticket for him. Mr. Pollock accordingly bought, in his own name, a ticket from the company
for a seat at the performance without disclosing, and the company and its staff did not
know, that the ticket was bought for the plaintiff. If they had known they would have refused
to supply the ticket. The plaintiff paid Mr. Pollock for the ticket, and on the evening of the
performance the plaintiff went to the theatre in order to occupy during the performance of
the new play the seat for which the ticket had been bought by Mr. Pollock. The defendant
happened to see the plaintiff in the vestibule of the theatre, and he thereupon gave orders
to the attendants that if the plaintiff had a ticket he was not to be allowed to occupy his
seat and his money was to be returned to him. In consequence of these orders the plaintiff
was refused admission to the performance, and he left the theatre. The money paid for the
ticket was offered to him but he declined to take it. The plaintiff claimed in this action
damages against the defendant on the ground that he wrongfully and maliciously procured
the company to break a contract made by the company with the plaintiff by selling to the
plaintiff a ticket for a seat entitling him to witness the performance at the theatre. Held-
The plaintiff knew that the Palace Theatre would not contract with him for the sale of a seat
for December 23. They had expressly refused to do so. He was well aware of their reasons.
I hold that by the mere device of utilizing the name and services of Mr. Pollock, the plaintiff
could not constitute himself a contractor with the Palace Theatre against their knowledge,
and contrary to their express refusal. He is disabled from asserting that he was the
undisclosed principal of Mr. Pollock. The non-disclosure of the fact that the ticket was bought
for the plaintiff prevented the sale of the ticket from constituting a contract as alleged, the
identity of the plaintiff being in the circumstances a material element in the formation of the
contract.
HUMBLE V HUNTER
A charterparty was executed by the plaintiff's son who described himself as "owner" of the
ship. In an assumpsit on the charterparty the plaintiff sought to claim as principal. Held-
the son by describing himself as "owner" had contracted as principal, and evidence was not
admissible to show that he contracted merely as the plaintiff's agent.
SUI YIN KWAN V EASTERN INSURANCE
A company called Axelson (P) owned the ship Osprey. They asked their shipping agents,
Richstone (A), to insure the ship, including personal injury to the crew. Richstone did this in
their own name. The Osprey, while moored in Repulse Bay, Hong Kong, was hit by typhoon
Ellen. Many of the crew were lost and relatives of two of them sued Axelson for negligence
and got judgment. They were awarded $HK1 million. However, Axelson had already gone
into liquidation, so the relatives stepped into the shoes of Axelson and sued the insurance
company (T). The insurance company argued that they had only dealt with Richstone, and
knew nothing of Axelson, the undisclosed principal. Held- the doctrine of undisclosed
principal applied: where an agent acts within his actual authority the undisclosed principal
may intervene and acquire the rights/liabilities of the agent. Here, the agents acted within
their actual authority and so the relatives could recover from the insurance company. Also,
there was nothing in the terms of the proposal form or the policy effected by the shipping
agents which expressly or by implication excluded the employers' right to sue; that an
employer's liability policy.
UNDISCLOSED AGENCY
Apparent authority has no place in an undisclosed agency. This is because the third party is
not aware of an agency relationship in the first place. In an undisclosed agency since the
contract is between the agent and the third party it means that the third party and the agent
can enforce the contract as against each other. Generally, the principal would not have a
right to enforce a contract as against the third party, however, there are certain exceptions:

• Where the agent is a factor, if the factor becomes insolvent. SUI TIN KWAN V EASTERN
COMPANY LTD. Commented [sq38]: A company called Axelson (P) owned
the ship Osprey. They asked their shipping agents, Richstone
(A), to insure the ship, including personal injury to the crew.
• The undisclosed principal can intervene if he was in existence and had capacity to enter Richstone did this in their own name. The Osprey, while
moored in Repulse Bay, Hong Kong, was hit by typhoon Ellen.
into the contract at the time it was made Many of the crew were lost and relatives of two of them
• If he had given actual authority for making the contract prior to its completion sued Axelson for negligence and got judgment. They were
awarded $HK1 million. However, Axelson had already gone
into liquidation, so the relatives stepped into the shoes of
Axelson and sued the insurance company (T). The insurance
company argued that they had only dealt with Richstone,
• The undisclosed principal cannot intervene if there is an express or implied term in the and knew nothing of Axelson, the undisclosed principal.
Held- the doctrine of undisclosed principal applied: where an
contract stipulating that he cannot intervene. HUMBLE V HUNTER agent acts within his actual authority the undisclosed
• He cannot intervene if personal element is strikingly present. SAID V BUTT principal may intervene and acquire the rights/liabilities of
the agent. Here, the agents acted within their actual
authority and so the relatives could recover from the
Relationship between principal and agent insurance company. Also, there was nothing in the terms of
the proposal form or the policy effected by the shipping
It is a fiduciary one. It can be contractual or gratuitous. agents which expressly or by implication excluded the
employers' right to sue; that an employer's liability policy.

Rights of the agent under common law Commented [sq39]: Facts above

• The agent is entitled to indemnity- whether acting in pursuance of a contract or Commented [sq40]: Facts above

not agents are entitled to be reimbursed in the course of their duties. Where the agency
is contractual, the indemnity will be an express or implied term. A contractual agent
may not be entitled to be indemnified if by the custom of the trade, the agent is not
entitled to be indemnified. So that a del credere agent who guarantees for third parties
will not be entitled to be reimbursed for any money paid on the basis of the guarantee.
Where the agency is not contractual then the basis of the indemnity will be restitution.
 The non-contractual agent is only entitled to be indemnified against expenditure
incurred on the principal's behalf. The indemnity covers expenses of liabilities while the
agent is acting within the scope of his authority. Once the requirements are fulfilled, an
agent of necessity may be entitled to be indemnified for reasonable expenses incurred
in the course of his duties.
• Exercise a lien- An agent may be able to exercise a right of lien over the property of
the principal in his care so as to protect the right to be paid commission or to be
indemnified. An agent may exercise a lien over property belonging to his principal which Commented [sq41]: The appellant was an agent of the
comes to his possession in his capacity as an agent and by lawful means. In general, respondent company in the gold coast. He was tasked with
the duty of purchasing and shipping rubber to the company
the right to a lien is based on possession. So that the right is lost if the agent voluntarily in London. By the agreement between the parties, the
gives up possession. If the principal uses trickery to obtain the goods it will not affect respondent company agreed to pay him commission of £50
and also some amount at the discretion of the company. The
the right of the agent to exercise a lien. This is because the possession would have be respondent after terminating the appellant’s employment
lost by fraudulent means. With respect to possession, constructive possession would instituted an action against him for monies due to them. The
appellant counterclaims for certain commission he alleged
suffice. Example a bill of lading is deemed to be in possession of the goods. An agent was owed to him. Held- it cannot determine the basis and
would lose his lien if his conduct shows he intends to waive his right to a lien. This right rate of the appellant’s commission as to do so would involve
varying the existing agreement of the parties by transferring
can be expressly excluded in the contract. Where the agent has to the right to a lien to the court the exercise of discretion vested in the
respondent. The court cannot intervene were the
the agent takes the property subject to any existing interest in it. The right of the lien commission is discretionary.
over the agent and all or any person who claims his rights through the principal. The Commented [sq42]: The applicant was a member of a
lien gives an immediate right to possession so that the agent can sue the principal or managing director of the company. He was appointed a
managing director by the articles of the company and by the
anyone else for wrongfully removing the property. articles his remuneration shall be decided as the directors
• Right to be paid- if the agency contract requires for the discretionary power of the may determine. The company after its incorporation did not
pay any remuneration to the applicant. Upon it liquidation,
principal to pay the agent, the court will not intervene-KOFI OBU V STRAUSS, RE the applicant brought an action against the liquidator for
RICHMOND GATE PROPERTIES. Where an agent is employed to bring out a certain amounts owed to him as his remuneration. Held- the
applicant cannot succeed to claim remuneration on quantum
outcome, the agent will only be entitled to his pay where he has discharged his merit basis because the directors at their discretion had not
obligation effectively unless the contract says otherwise-COLES V ENOCH. determined that any remuneration be paid to him.

The def was the owner of an empty store. He authorized the plf in an agency Commented [sq43]: The agent was employed by the
principal, the owner of a colliery as sole agent for the sale of
relationship on terms that he would be paid commission if he succeeded in getting a corn for seven years as long as the principal carried on his
hirer for the shop. The plf spoke to some of his business friend for which one Wilkes business in a certain town. The agreement contained a
provision for notice of termination if the principal could not
overheard the conversation, which he later asked for information. Wilkes went to look supply, or the agent could not sell a certain amount per year.
After four years, the principal sold the colliery to a third
for shop and rented it. The plf sued the def for payment of his commission. Held- it party and the agent sued for breach of contract. The agent
was not the plf’s action which was the primary cause of Wilkes becoming the tenant of argued that there was an implied terms in the agreement
that the principal could not sell the colliery. Held- there was
the shop. Thus, he was not entitles to his commission. no implied term that will be imputed in the agreement as the
principal was only bound to supply coal whilst he carried on
his business. By the terms, the seven year period could be
Generally the agent may be entitled to damages against the principal is there is an terminated.
express or implies term of the contract that the principal may not hinder or prevent the Commented [sq44]: The plf an estate agent was engaged
agent’s earnings. Typically, the court will not imply the term if it is deemed to be to find a purchaser for four of the principal’s cinema. The
principal vendors agreed to pay the plf a commission of
inferring with the right of the principal to deal with his own property. If the court can £10,000 if the cinema were sold for £185,000 or more. The
imply, the court would imply as such and the agent will be deemed his commission. plf introduced a purchaser who offered £185,000 to the
principal for the cinemas. The principal however refused the
This can be seen as a breach of contract. RHODES V FARWOOD, LUXOR V COOPER, offer and as such no sale was effected. The plf sued the
principal claiming that they were in breach of an implied
term for the principal to accept. Held- there was no such
ALPHA TRADING LTD V DUNNSHAW PATTEN. implied term in the contract
 An agent negotiated a contract for the sale of cement between the seller and the third
party. The contract was made but the seller breached the contract in that he failed to
deliver. The price of the sale was consequently not paid and as such the agent received
no commission for his service. Held- it was right to imply a term into a contract of
agency to the effect that the defs could not fail to perform their contract with the buyer
so as to deprive the agent of his commission. This is because the agent had done his
end of the bargain by effecting the contract and as such the act of the defs breaching
the contract cannot affect the commission of the plf’s.

Where a person is appointed a sole agent, he is entitled to be paid if a sale is effected

by another agent. It is immaterial that the agent did not affect the outcome. When a
person is appointed a sole agent with the exclusive right to deal, it even affects the
right of the principal to deal with his own goods. An agent who performs his task will
lose his right to commission if he commits a serious breach of the agency contract.

AGBEMASHIOR V STATE INSURANCE

The plfs got involved in a car accident and were injured. The third def on insurance
claims agent approached the plfs and asked them to be his principals to act on their
behalf to collect the insurance claims. The third def subsequently succeed in getting the
claims but however did not give the plfs the money, upon discovery of the fraud the
plfs sued for payment. Held- the plfs after accepting the third
def offer entitled him to be their agent. He stood in a fiduciary relationship to his
principal and the duty here was to account alimonies to the plfs. This he breached. Also,
the court held that despite the fraud, he will be entitled to his commission.

WAY V LATILLA
The plf (agent) was an employee with a company engaged in mining operation in West
Africa. He was approached by the def (principal) when it was agreed that the agent will
supply the principal with information concerning gold mines in West Africa. No express terms
were agreed as to remuneration, but the principal led the agent to believe that a commission
would be paid. The plf sued for his commission. Held- although there was no concluded
contract between the parties, there was an implied term in the contract of agency that the
agent was entitled to a reasonable commission on a quantum merit basis. That is payment
for what the service was worth.
These are not the only rights an agent may have. By a contract additional rights
may be created. The same applies to duties.
Duties of the agent at common law
• Duty to obey instructions- a contractual agent is duty bound to perform the duties
undertaken under the contract and will be liable for breach of the contract if he fails.
A gratuitous agent is not under any obligation to obey the instructions of the principal.
Although the contractual agent must obey the instructions, the professional agent is
under a duty to warn the principal of any risk or inherent dangers in the instructions.
The professional agent maybe subject to certain professional conduct. The agent
whether under contract or not is not under any obligation to obey instructions which
are illegal. The instructions of the principal cannot be used as a defence in a criminal
trial. TURNIP V BILTON
An agent agreed to insure his principal’s ship. He failed to do so, which meant that
when the ship was lost, the principal was uninsured. It was held that the agent was
liable for breach of contract
• Duty to exercise reasonable care- all agents owe a duty of care to their principal
which requires them to exercise reasonable care in the exercise of their authority. This
duty is distinguished from the one as it exists in the law of torts. A gratuitous agent is
not bound to obey the instructions of the principal but when he decides to obey, he is
bound in that time to exercise a duty of care. The question of care vary according to
the facts. So that if an agent holds himself out as a member of a profession, he would
be expected to show the standard of skill and care of competence reasonably expected
by the members of the profession. CHAUDRHY V PRABHAKAR
The plaintiff, an accountant had recently passed her driving test and knew nothing
about cars. She asked the first defendant, a friend, to find a suitable second hand car
for her to buy, although he was not a mechanic. She stipulated to the defendant that
the car shouldn’t have been involved in an accident and he was doing this for free.
The first defendant found a one year old car which was being offered for sale by the
second defendant. The car had been engaged in an accident before but had been
fixed and repaired, although it was not road worthy. The first defendant recommended
the car to the plaintiff buy for which she did. She found out later that the car had
serious problems and she sued the defendants for the price of the car and damages.
Held- the court held that a gratuitous agent owes a duty of care to the principal to
exercise the degree of care and skill which could be reasonably be expected of him in
all the circumstances, that degree of care and skill being measured objectively and
not subjectively. The first defendant knew that the plaintiff was relying on him and as
such, he was in breach of his duty.
 • Duty of personal performance- deligatus non potest delegare. An agent is not Commented [sq45]: The plaintiff filled in a coupon of
Zetters International Pools Ltd. and gave it to the third
permitted to delegate the performance of his duties unless delegation is authorised by defendant with his stake of two shillings. The third
defendant was a sub-agent of the first defendant who was
the principal. Unless the agent had apparent authority, he principal would not be the sole agent of Zetters International Pools Ltd. in Ghana.
bound by the actions of the sub agent. ANDOH V FRIMPONG AND CO. In the absence The third defendant stamped the plaintiff’s coupon and
signed it and two days later handed it to the second
to the contrary the court would presume that there is no privity of contract between defendant with a list which included the number of the
plaintiff’s coupon. The second defendant signed the list
the sub agent and the principal. CALICO PRINTERS ASSOCIATION V BARCLAYS BANK signifying that he had received the coupon, but failed to
LTD, HENDERSON V. MERRETT SYNDICATES, the principal may not recover from the forward the coupon or the stake money to the first
defendant for onward transmission to Zetters International
sub agent but can sue him in the tort of negligence- HEDLEY BYRNE Pools Ltd. in London, where it should have been received
before the relevant football matches were played. The
The plaintiff wanted to check the creditworthiness of a customer and so asked their plaintiff won the stake but could not receive the money ... [3]
Commented [sq46]: The plaintiffs sold cotton to a
bank to check it from the bank of the customer. The bank sent a report stating that consignee in Beirut and sent shipping documents to the 1st
they were creditworthy but would not take responsibility for the report. The plaintiff defendant, Barclays Bank Ltd, with instructions to insure the
goods if documents were not accepted by the consignee.
acted on it and resulted in his detriment as it was found out that the customer The defendant bank had no branch in Beirut and with the
knowledge of the plaintiffs instructed the 2nd defendants,
Easipower was not credit worthy. Held- in the absence of a special relationship Anglo-Palestine Bank to act as their sub-agent in Beirut.
between the inquirer and a person giving reference, the latter did not owe a duty Barclays told the Anglo-Palestine Bank to insure the goods if
the documents were not accepted. The Anglo-Palestine Bank
towards the former to exercise reasonable care in making statements in answer to the did not present the shipping documents for payment and
failed to insure the cotton, which was destroyed by fire. The
enquiry. However, economic loss not arising from a contract was recoverable. plaintiffs then sued both the agent and the sub agents for... [4]
• The agent's fiduciary duties Commented [sq47]: The plaintiffs were Lloyd’s names
who were members of syndicates managed by the
The law places on the agent certain fiduciary duties to protect the interest of the principal. defendant nderwriting agents. The plaintiffs brought
proceedings against the defendants alleging that the
The agent fiduciary duties are strict so that the agent maybe liable for breach of that duty defendants had been negligent in the conduct and
although he acted in good faith and produced benefits for the principal. BOARDMAN V management of the plaintiff’s syndicates and wished for
limitation purposes to establish a duty that might be owed
PHIPPS by the defendants.
HELD: the court held that where a person assumed
• Avoid conflict of interest-MCPHERSON V WATT, responsibility to perform to perform professional or quasi
professional services for another who relied on those
services there is a duty on the part of the person providing
... [5]
KELLY V COOPER
Commented [sq48]: The Phipps Trust (P) owned a small
holding of shares in a company. Boardman, a solicitor and
Kelly instructed Coopers, a firm of estate agents, to sell his house. Brant, who was a another, acting as agents for the trustees of an estate
neighbor of Kelly also instructed Coopers to sell his house. Cooper found a single buyer attended the annual general meeting of a company in which
the estate had a minority holding of shares. Later, they
for both houses and he first made an offer for Brant’s house which he accepted. obtained information about share prices from the company.
The Phipps Trust could not have raised the money to buy a
Coopers did not inform Kelly about this offer and the buyer went ahead and concluded controlling interest in the company; neither did the trustees
the sale with Kelly for his house. Kelly brought an action against Coopers claiming that desire to do so. They formed the opinion that the company
could be made more profitable and acting honestly and
they were in breach of their duties in failing to disclose material information to him without concealment (but not having first obtained the
‘informed consent’ of all the trustees), used their own ... [6]
and placing themselves in a conflict of interest in the sale of the houses. Held- the
Commented [sq49]: A solicitor (A) was appointed by two
court held that the scope of the fiduciary relationship owed by the defendants to the ladies (P) to sell their houses. The solicitor wanted the
properties for himself but did not disclose this. Instead, he
plaintiff (and in particular the alleged duty not to put themselves in a position where arranged the purchases nominally in the name of his
their duty and their interest conflicted) are to be defined by the terms of the contract brother. The solicitor and his brother brought an action
seeking specific performance to enforce the sales. Held- The
of agency. From the evidence, the contract of agency between Cooper and Kelly did court held that specific performance will be refused. The
solicitor placed himself in a position of conflict of interest.
His obligation to arrange a purchase on the best possible
terms conflicted with his desire to own the property.
 not include a term (express or implied) preventing the estate agents from seeking to
earn a commission from rival vendors.
• Duty not to make secret profit-BOARDMAN V PHIPPS, The Phipps Trust (P)
owned a small holding of shares in a company. Boardman, a solicitor and another,
acting as agents for the trustees of an estate attended the annual general meeting of
a company in which the estate had a minority holding of shares. Later, they obtained
information about share prices from the company. The Phipps Trust could not have
raised the money to buy a controlling interest in the company; neither did the trustees
desire to do so. They formed the opinion that the company could be made more
profitable and acting honestly and without concealment (but not having first obtained
the ‘informed consent’ of all the trustees), used their own money to bid for and
eventually to acquire a controlling interest in it. Ultimately they succeeded in making
considerable profits for themselves and the estate from capital distributions on their
respective holdings of shares. One of the beneficiaries under the Phipps Trust brought
an action calling for the agents to account to the Trust for the profits made. Held- the
court held that they must account to the trust for the profit that they had made from
their own investments: the profits were made by reason of their fiduciary position as
agents and by reason of the opportunity and the knowledge which had come to them
whilst acting in that capacity. However, as they acted in good faith they were entitled
to generous payment for their work and skill

HIPPISLEY V KNEEBROTHERS
The plaintiffs (principals) appointed the defendants as agents to sell goods on
commission. The plaintiffs also agreed to pay the agent’s expenses. The defendant
sold the goods and charged the plaintiff with the cost of printing and advertising. The
defendant also claimed the full cost even though they had received a discount from
those who had provided these services. At all times, the agent acted honestly and in
accordance with trade custom of which the plaintiff had no knowledge about. Held-
The court held that, Knee Brothers were in breach of their duty and should account
for the discount as a secret profit. However, because Knee Brothers acted in good
faith and their breach was only incidental to the sale itself, they were entitled to keep
their commission.
• Duty to not take a bribe- REID V AG OF HONG KONG
The defendant (A) was once the assistant Director of Public Prosecutions for Hong
Kong. He took bribes and favoured certain criminals. With that money, he purchased
 properties in New Zealand. Held- The court held that where a fiduciary accepted a
bribe as an inducement to betray his trust he held the bribe in trust for the person to
whom he owed the duty as a fiduciary. The defendant held these properties (as far as
they represented the bribes) on constructive trust for the Crown as beneficiary. Should
the value of that property increase, the Crown, and not the defendant, could claim
the profit. This was because the defendant could not be allowed to profit from an
investment with a bribe

• Duty to account

TERMINATION

At common law an agency may be terminated by mutual consent, by operation of law or by

the unilateral act of either party.
Termination by parties
Commented [sq50]: Ansell was employed as managing
Where an agent is appointed for a fixed period to perform a specific task, the agency director of the plaintiff company. Acting on behalf of the
company, Ansell contracted for the construction of certain
relationship would come to an end when the time elapse or the task has been completed. fishing-smacks, but unknown to the company, he took a
commission from the shipbuilders on the contract. Ansell
Unilateral termination may end the relationship but may open up the party at fault to claim also accepted bonuses from two other companies (in which
he held shares) with which he had placed orders on behalf of
for breach of contract. Where the agent is appointed for a fixed term, the principal may the plaintiff company. Suspecting misconduct, the plaintiff
terminate the agency at time before the expiry if the agent commits a breach of the agency company dismissed Ansell from office and later brought an
action against him on account of the secret commission and
contract. The principal may rely on the breach even though he was unaware of the breach bonuses he had received.
Held- the court held that, where an agent breaches his
at the time that the principal dismissed the agent. BOSTON DEEP SEA FISHING COMPANY agency contract with the principal, the principal has the
AND ICE V ANSELL. Where the agent is appointed for an indefinite term the right to authority to dismiss him from his employment. The court
thus concluded that the receipt of the secret commission
terminate depends on the terms of the contract. In the absence of a termination clause, the was a good ground for dismissal and also, Ansell was ordered
to account for his secret commission and bonuses.
court may imply a term allowing a termination by giving reasonable notice. Reasonable
Commented [sq51]: The plaintiffs entered into an
notice if a question of fact. MB AIRCRAFT COMPANY V CANADIAN FLIGHT EQUIPMENT agreement with the defendant where they appointed his as
their sole agents for all their products on the North American
Termination by operation of law Continent. The defendant agreed not to sell or compete in
any rival trading with the plaintiff company and the plaintiffs
also agreed not to appoint any person as an agent for their
• Frustration- products in their company. The agreement provided for
payment of the agent but there was no provision for the
• Death- GORDON V ESSIEN termination of the agency agreement. The plaintiff sought to
terminate the services of the defendant. The defendant
The deceased, a Nigerian national while residing in Ghana acquired a house here. contended that the agreement can only be terminated by
mutual consent. Held- the court held that the parties did not
When she left Ghana, she left the house in the care of the plaintiff’s father who intend to create a permanent agreement and that the
agreement can be terminated unilaterally but it must be
collected rents on her behalf. When the father became ill. He assigned that with reasonable notice.
 responsibility to the plaintiff who continued to perform that duty until the death of the
deceased. The personal reps of the deceased executed a Power of Attorney in favour
of the defendant to collect rents from the house. Following a dispute between the
parties as to who is entitled to collect rents on the properties, both issued a writ in
the courts for determination. Held- the court held, inter alia that, death was one of
the events which automatically determined an agency as the conception of authority
demanded a continuing consent of the principal to the agent’s act on his behalf and
with the death, the agency had ceased to be in operation. Thus, after the death of
the deceased, the plaintiff had no authority to collect rents on the property.
• Insanity- YONGE V TONYBEE Commented [sq52]: Solicitors were instructed by a client
to conduct his defence to an action which was being
commenced against him. Before the commencement of the
• Bankruptcy- action, the client was certified to be of unsound mind. In
ignorance of this fact, the solicitors entered an appearance
for him. Subsequently, the plf's solicitor became aware of
the def's unsound mind an application was made to have the
action struck out and that the solicitors who have assumed
to act for the def should be ordered personally to pay the
plf's cost of the action up to date. Held- The court held that
the agency relationship between the solicitors and the client
terminated with the insanity of the client.
Page 14: [1] Commented [sq23] sybil quaye 2/23/15 8:07:00 PM
The first def was the beneficial owner of the house which he was anxious to sell. He asked his wife to put it into the
hands of estate agents. The asking price was £25,000. The plf made an offer for the house and the wife instructed
the estate agents to accept it. The first def did not give his authority to the second def to enter into a binding
contract. The old instructed an architect to undertake certain functions on his behalf in connection with the house.
The plf's also visited the house and was introduced to the first def the new owner. The first def went abroad but
before he appointed. A power of attorney empowering her to complete the sale of the house. However the house
was never handed over to the plf, it was sold to the third def. Held- the first def was under the duty to inform the
old that the second def acted without his authority and that his failure to do so amounted to a representation by
conduct that she had authority. To found an estoppel it is not necessary that the representation relied on should
be false to the knowledge of the represent or provided that the representor acted in such a way that's reasonable
man would take the representation to be true and believe that he was intended to act on it. In the circumstances
the plf had been induced but the efforts def’s representation to a to his detriment in that he had been put to
expense in employing the architect and the builder as well as continuing the employment of his solicitor in the
conveyancing work in connection with the purchase. The first def's was therefore stopped from asserting that the
contracted entered into without his authority and the plf was entitled to specific performance.

Page 14: [2] Commented [Ma24] sybil quaye 2/24/15 6:32:00 PM

The def had a jeweller’s shop and gave the agent authority to give orders for goods to be sent to the shop. The
agent had given such orders to the plf in the pastor which the def had accepted the goods. The agent absconded
from the shop and ordered from the plf and took the goods away saying he was taking it to the shop. The defer
fused to pay for the goods and the plf's brought an action to recover what is due. Held- he def had conducted
himself in a way to make the plf believe that whiles the agent was under employment he had the authority of the
def to order goods from the plf. The plf not having notice of the agent’s termination of authority would therefore
be entitled to recover the price form the def.

The defendant (P) employed his nephew (A) to run his jewellery shop. In practice the nephew would order
jewellery from, inter alia, the plaintiff jewellery supplier (T) and the defendant would pay for it. The nephew left
the job, but the supplier was not told that the nephew’s agency had been terminated. Later, the nephew obtained
some jewellery from the supplier – purportedly under the old arrangement – and absconded with it. The supplier,
still under the impression that the agency existed, approached the defendant for payment.

Held the defendant had represented to the supplier that the nephew had authority to order jewellery by omitting
to inform him of the termination of the agency. Thus, the nephew had apparent authority to order the jewellery
and the defendant was liable.

Page 27: [3] Commented [sq45] sybil quaye 4/27/15 4:18:00 PM

The plaintiff filled in a coupon of Zetters International Pools Ltd. and gave it to the third defendant with his stake of
two shillings. The third defendant was a sub-agent of the first defendant who was the sole agent of Zetters
International Pools Ltd. in Ghana. The third defendant stamped the plaintiff’s coupon and signed it and two days
later handed it to the second defendant with a list which included the number of the plaintiff’s coupon. The
second defendant signed the list signifying that he had received the coupon, but failed to forward the coupon or
the stake money to the first defendant for onward transmission to Zetters International Pools Ltd. in London,
where it should have been received before the relevant football matches were played. The plaintiff won the stake
but could not receive the money prize. He thus sued for damages for negligence. Held-the court held that an agent
is liable for the acts and defaults of his sub agents even though their employment was authorized by his principal
and he must account to his principal for all monies received by them. There is also no privity of contract between
the principal and the sub agent.
Page 27: [4] Commented [sq46] sybil quaye 5/2/15 9:19:00 PM
The plaintiffs sold cotton to a consignee in Beirut and sent shipping documents to the 1st defendant, Barclays Bank
Ltd, with instructions to insure the goods if documents were not accepted by the consignee. The defendant bank
had no branch in Beirut and with the knowledge of the plaintiffs instructed the 2nd defendants, Anglo-Palestine
Bank to act as their sub-agent in Beirut. Barclays told the Anglo-Palestine Bank to insure the goods if the
documents were not accepted. The Anglo-Palestine Bank did not present the shipping documents for payment and
failed to insure the cotton, which was destroyed by fire. The plaintiffs then sued both the agent and the sub agents
for negligence. Held- The court held that an agent undertakes responsibility for the whole transaction; where a
sub-agent is in breach of duty the principal must look to the agent and not the sub-agent. In turn the agent may
look to the sub-agent. This is because, generally, there is no privity of (agency) contract between the principal and
the sub-agent. Privity between principal and sub-agent can only exist when the principal has authorised the agent
to create such privity between the principal and a sub-agent; this would require ‘precise proof’.

Page 27: [5] Commented [sq47] sybil quaye 5/2/15 9:20:00 PM

The plaintiffs were Lloyd’s names who were members of syndicates managed by the defendant nderwriting agents.
The plaintiffs brought proceedings against the defendants alleging that the defendants had been negligent in the
conduct and management of the plaintiff’s syndicates and wished for limitation purposes to establish a duty that
might be owed by the defendants.
HELD: the court held that where a person assumed responsibility to perform to perform professional or quasi
professional services for another who relied on those services there is a duty on the part of the person providing
the services to exercise reasonable care and skill in doing so. Thus, both agents nad sub agents are not precluded
from this duty

Page 27: [6] Commented [sq48] sybil quaye 4/27/15 4:22:00 PM

The Phipps Trust (P) owned a small holding of shares in a company. Boardman, a solicitor and another, acting as
agents for the trustees of an estate attended the annual general meeting of a company in which the estate had a
minority holding of shares. Later, they obtained information about share prices from the company. The Phipps
Trust could not have raised the money to buy a controlling interest in the company; neither did the trustees desire
to do so. They formed the opinion that the company could be made more profitable and acting honestly and
without concealment (but not having first obtained the ‘informed consent’ of all the trustees), used their own
money to bid for and eventually to acquire a controlling interest in it. Ultimately the succeeded in making
considerable profits for themselves and the estate from capital distributions on their respective holdings of shares.
One of the beneficiaries under the Phipps Trust brought an action calling for the agents to account to the Trust for
the profits made.
Held- the court held that they must account to the trust for the profit that they had made from their own
investments: the profits were made by reason of their fiduciary position as agents and by reason of the
opportunity and the knowledge which had come to them whilst acting in that capacity. However, as they acted in
good faith they were entitled to generous payment for their work and skill.